By Rebekah Mintzer, from Corporate Counsel

Media company Al Jazeera America found itself in a tricky situation this week, when The New York Times reported that the company’s general counsel, David Harleston, appears not to be licensed to practice law in the state of New York where AJAM is headquartered—or in anywhere else in the U.S. It’s unclear why Harleston, a Yale Law grad who passed the bar exam for New York but never actually was admitted to practice, didn’t get licensed. But on learning of the issue, AJAM suspended the general counsel and opened up an investigation.

Getting caught lawyering without a license at a large, sophisticated media company like AJAM is unusual. Normally the issue of licensing comes up more often when in-house lawyers change jobs or do work in a new jurisdiction and may need to fulfill certain requirements to practice there.

Rules on what in-house attorneys already licensed elsewhere need to do in a new jurisdiction vary from state to state, and the choice of relevant rules is usually based on where the legal work is being done, not where the company the in-house counsel’s company is headquartered or incorporated. Many states base their licensing rules on the American Bar Association’s Model Rule 5.5.,which deals with the unauthorized or multijurisdictional practice of law. Rule 5.5 includes an exception for in-house attorneys that meet certain specifications to practice in these new states without going through types of processes—like taking a bar exam—that they had to go through the first time.

In some states, compliance with the Rule 5.5 in-house counsel exception will be enough, but many others require in-house counsel to jump through some hoops to get licensed to practice in the new jurisdiction. Some require additional registration and applications, while others may require fees or reciprocity with the state where the attorney has full bar admission. And then there may limitations on the corporate counsel’s ability to practice with the license. In some states, in-house attorneys without formal bar admission won’t be able to work on pro bono projects, and in others, they have to maintain a certain level of physical presence in the jurisdiction in order to keep up their license.

There are plenty of ways that all of this can make life confusing, especially for in-house attorneys that often move around the country on their company’s behalf. It can also become hard because unlike the typical firm attorney, in-house counsel may spend a great deal of time working on their company’s business matters rather than its legal ones. Michael Feldman, a partner at OlenderFeldman sees where this could cause licensing issues. “I think that it’s realistic because it’s not uncommon to see lawyers playing dual roles,” he says. “Often times as you become more senior, your lawyer role can be diminished and the business role can increase.”

If an in-house attorney is working on business in a state where he or she is not licensed to practice law, that’s probably not going to be a problem. Once the lawyer starts giving legal advice though, bets are off.

The situation at AJAM has probably been embarrassing for both Harleston and the company, but it could still get worse. For in-house lawyers who don’t follow attorney-licensing rules, the consequences can be harsh. “Unauthorized practice of law is a crime in many jurisdictions,” says Michael McCabe Jr., a partner at Funk & Bolton. “It’s a misdemeanor, so it’s not to be taken lightly.”

And practicing without the proper license can not only get the individual lawyer in big trouble, but can also prove damaging for the company. The work that an unlicensed in-house attorney does could very well lose that crucial attorney-client privilege.

McCabe pointed to at least one piece of litigation where an attorney’s lack of licensing put the entire case at serious risk. In a 2010 case, Gucci America Inc. v. Guess? Inc. one of the in-house counsel for Gucci had an inactive licensing status with the California State Bar, and as a result, a magistrate judge ruled that his communications relevant to the case would lose attorney-client privilege because he technically was not a licensed attorney at the time of the communications.

Although in Gucci, that decision was eventually overturned, the message was clear: using an attorney without the proper licensing can leave a company vulnerable, especially when there’s litigation involved. McCabe adds that companies can’t afford to take chances with licensing, because they won’t always come out on top like Gucci did. “Typically privilege issues and licensing issues are judge by judge and state by state,” he says.

Given the risks involved corporate legal departments—and law firms, for that matter—should think carefully about whom they hire. Checking on someone’s license to practice seems a relatively quick and easy fix, but it’s not one that those who are hiring necessarily do. Feldman says that in his experience, those doing the hiring tend to take legal job candidates at their word when it comes to qualifications. “Assuming you’re not hiring someone right out of law school,” he notes ”it’s probably not that common that when hiring an in-house or a private lawyer, investigate with the relevant bar to see if the person is actually admitted.”

For more on this story go to: http://www.corpcounsel.com/id=1202742196076/Lawyering-Without-a-License-Just-Dont-Do-It#ixzz3rIHckMl9